Colt Seeks August Auction After Bankruptcy Filing

Colt Defense LLC filed for chapter 11 bankruptcy protection Sunday, warning its business is in a fragile state and it needs a quick sale to survive.

The bankruptcy filing was expected for the famed gun maker, which failed to win the support of bondholders for a debt-reshaping agreement. Colt had said if it couldn’t reach a deal, it would put itself up for sale in bankruptcy.

Papers filed in the U.S. Bankruptcy Court in Wilmington, Del., estimate the company’s debts and assets are both in the $100 million to $500 million range. Liabilities include more than $100 million in top-ranking secured debt and the $250 million bond debt.

Colt is racing to get to the auction block by Aug. 3, with an opening buyout offer from Sciens Capital Management LLC, Colt’s private-equity backer.

In court papers, Colt said it can’t afford a long court fight with bondholders, and could have to liquidate if the chapter 11 proceeding becomes a long, litigious bankruptcy.

The history of business is replete with stories of companies that hit upon a successful idea or product, rose to the top of their markets, stagnated, and then collapsed into irrelevancy.

Colt hasn’t innovated in years, and coasted for a long time on a combination of long-term brand recognition and institutional sales. “New” products were nothing more or less than variations of 1911 pistols more than a century old, and variations of M16/M4 rifles originally designed more than 50 years ago.

Colt didn’t innovate. It shows no signs of being capable of innovating.

Bob Owens is the Editor of BearingArms.com.
Bob is a graduate of roughly 400 hours of professional firearms training classes, including square range and force-on force work with handguns and carbines. He is a past volunteer instructor with Project Appleseed. He most recently received his Vehicle Close Quarters Combat Instructor certification from Centrifuge Training, and is the author of the short e-book, So You Want to Own a Gun.
He can be found on Twitter at bob_owens.
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